Mattel wins court ban of MGA's Bratz dolls

By Gina Keating and Aarthi Sivaraman

LOS ANGELES/NEW YORK (Reuters) - A California federal judge ordered MGA Entertainment Inc to stop selling its popular Bratz dolls and banned it from using the toy's name, finding that hundreds of Bratz products infringe copyrights owned by rival toymaker Mattel Inc (MAT.N).

U.S. District Judge Stephen Larson also ordered MGA to recall all Bratz dolls from retailers and to destroy "specialized plates, molds and matrices" used to make the dolls, under the terms of a permanent injunction issued late on Wednesday.

The ruling -- which was stayed until at least early next year -- handed the biggest victory yet to Mattel in its more than four-year legal fight over the Bratz dolls. Mattel shares rose 6.7 percent.

"This is a large win for Mattel, if upheld, as it effectively removes Bratz from the competitive landscape," Wachovia Capital Markets analyst Tim Conder wrote in a note.

"This is obviously much more important and critical than any one-time monetary damages," he said.

The ruling appears to allow MGA and retailers to sell the Bratz dolls through the holiday shopping season, when toy sellers typically ring up a significant portion of annual sales.

But Larson rejected the idea of allowing MGA to continue to make the pouty-lipped, urban chic dolls that made its name and fortunes while paying Mattel a royalty.

He set a Feb. 11 hearing on post-trial motions.  Continued...